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Brent could hit $ 80 this summer as the security fund loses steam



Brent Crude and WTI Raw prices hit a five-month high this week among signs of tightening the market and clashing in the wildcard OPEC producer Libya.

Brent Crude topped $ 71 and WTI Crude rose above $ 64 a barrel in the middle of this week as supply reductions outweigh the fear of slowing economic growth.

After the accident in the fourth quarter of 2018, oil prices have already increased by more than 30 per cent so far this year.

But there is still room for oil to run and Brent can go as high as $ 80 a barrel this summer, due to geopolitical issues, OPEC and Allied downturns, demand needs and not so crowded hedge fund lengths that indicate that the bulls have space to add more bullish positions in crude oil futures and options, according to a research note from RBC Capital Markets, quoted by CNBC.

RBC strategies raised their oil price forecasts for average Brent and WTI average prices this year. Brent Crude is now averaging $ 75 a barrel in 201

9, up from the previous call of $ 69.50, while the WTI is expected to average $ 67 a barrel throughout the year, up from $ 61.30 in RBC's previous estimate.

According to RBC's experts this summer, Brent may even hit $ 80.

This is a threshold that oil-demanding countries like India consider too high and which analysts say is the beginning of demand destruction.

"We see price risk asymmetrically skewed upward by geopolitically-infused collections that can shoot prizes against or even beyond our high-end bull-case scenario and test the $ 80 / bbl value for periodic periods this summer," CNBC quoted RBC's research paper written by the strategies of Michael Tran, Helima Croft and Christopher Louney.

Nevertheless, not all analysts believe that Brent has any $ 10 per barrel upside down from today's level. Goldman Sachs believes, for example, that the rally has almost gone, and that Brent will probably not beat $ 80. Goldman has raised his average Brent Q2 call to $ 72.50 from $ 65 per barrel, but expects slate production to rise and OPEC will come under pressure to reverse some of the cuts in the second half of the year.

But RBC warns that we could see $ 80 burned this summer on the back of geopolitically motivated oil collections.

Several geopolitical factors in the coming months may lead to higher oil prices than the current $ 71 per barrel of Brent.

First, the US is due to announce in weeks whether it would extend the waivers for some Iranian oil buyers to continue buying Tehran's oil. Analysts largely believe that "zero Iranian oil exports" will not occur in early May, when today's discrepancies expire, because the administration will be more relieving again, at least to some buyers, not to drive oil (and gasoline) prices for loud.

Then there is the question of tightening US sanctions against Venezuela among the Latin American country's collapsed oil production, plagued by sanctions and massive blackouts and the 289,000 bpd fall below 1 million bpd to 732,000 bpd in March, according to OPEC's secondary sources.

On top of these geopolitical concerns, one of OPEC's wildest cards over the past few years, Libya, has been thrown into turmoil after Eastern forces General Khalifa Haftar and his self-styled Libyan national army (LNA) are moving west on Libya's capital Tripoli and clashing with troops from the UN supported the government in a renewed confrontation that could escalate and threaten to disturb, again Libya's oil production and exports.

Aside from geopolitical torch-ups that could suddenly tighten supply more than OPEC's cuts have meant, the placement of money leaders in oil futures suggests that the oil still has room to rise, according to RBC. Related: BP withdraws from China's Shale Patch

"In short, there is room to run to the upside, given that geopolitical hotspots are still a clear and present danger to the market but many injured bulls remain after the Q4 & apos; s washout, "RBC analysts note.

The ratio between bullish and bearish bets peaked at 13: 1 in the fall of 2018 and averaged 8.5: 1 through last year, according to RBC. [19659002] In the week of April 2, the ratio of long and short positions in Brent and WTI increased to 6.50 from 5.60 last week, according to exchange data prepared by Reuters market analyst John Kemp. To compare, last year in mid-April, the ratio was 15.00: 1, while at the end of September, before the fall in prices in the fourth quarter, the ratio was 13.88: 1.

In addition to other factors that increased oil price Outlook, demand also holds up, especially in China, according to both RBC and Goldman Sachs. However, RBC warns that the exaggerated influence of China and India on global oil demand growth may be a downward risk to oil prices if economic growth materially deteriorates.

By Tsvetana Paraskova for Oilprice.com

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